Canada

Next wave on the way in Ontario -- Big players scoop six concessions

Wind power projects swept the list of winners in Ontario's request for proposals (RFP) for 500 MW of renewable energy capacity, with the province signing 20-year power purchase contracts for six new wind farms with a combined capacity of 492.1 MW. In announcing the winners, energy minister George Smitherman emphasised the economic benefits the wind farms will bring to a province hard hit by the recession.

"This is a major green economic initiative, one which will benefit all of Ontario," Smitherman says. "We are determined to maximize the development of the province's green energy sources so we can not only clean up our air, but kick start our economy." The projects, the result of an RFP issued in November, represent an investment of C$1.32 billion and will inject an estimated C$4 million into local economies through land leases and will also create about 2200 direct and indirect jobs, according to the province.

Unlike past RFPs, which focused almost exclusively on price, this competition put more emphasis on mature projects weighted according to permitting progress, turbine accessibility, developer experience and financial strength. Most of the winning bidders are large companies that are major players in the wind and power generation sectors; few seem to expect any significant problems accessing the capital they need to complete the projects, despite tight credit markets. Having a long term power purchase agreement with the Ontario Power Authority (OPA), the government agency responsible for electric system planning and procurement, helps, says Renewable Energy System Canada's Peter Clibbon, whose company, part of the UK-based RES Group, won contracts for two 99 MW projects.

"It is true there are fewer lenders on the market, but Canadian lenders still are hungry for quality projects. If a project is well assembled, inherently non-contentious, well thought through, as these projects are, we don't anticipate problems." RES Canada's Talbot Wind Farm and Greenwich Wind Farm, each costing C$250 million, will be built in 2010, says Clibbon. The company is in the process of finalising a turbine supply agreement.

The contracts come less than a year after RES Canada, as a partner in St-Laurent Énergies, won power purchase agreements in neighbouring Quebec for 954 MW of wind power. Clibbon expects to be able to bring the experience the company will gain in both provinces to other markets in Canada. "These development projects allow us to basically get a very firm construction reference in Canada. Although our reference in the United States is pretty second to none, having pricing available in Canada is going to be extremely helpful to us and not only as a developer," he says. "We expect the business we've built in Quebec and Ontario will enhance our construction portfolio and allow us to really move out of central Canada and start doing projects out west."

Financing available

Toronto-based Brookfield Renewable Power won a power purchase agreement for its 50.4 MW Gosfield Wind Project in Essex County at the south-western tip of Ontario. Zev Korman, Brookfield's director of investor relations, thinks financing will be available. "Fifty megawatts, I think, is certainly much more financeable than a significantly larger project. It's not a huge project, especially for a company like Brookfield that has 4000 MW in operation," he says. "While I can't really offer any specifics with regard to the financial details, we think something like that is financeable, especially given the quality of the contract that we have in place with the OPA." The company still has to finalise a turbine supply agreement.

Chicago-based Invenergy LLC, a major player in the US wind industry that broke into the Canadian market last year by winning a contract from Hydro-Quebec, is planning to start construction of its 78 MW Raleigh Wind Energy Centre in southern Ontario in the second quarter of the year, says the company's Andrew Flanagan, with operation of the 52 GE Energy 1.5 MW turbines expected by mid-2010. Invenergy is attracted by Ontario's approach to renewables. "When they say they are going to buy something, they buy it. The RFP process is stringent and it takes a lot of energy and effort, but its fair and predictable," he says. "We think that, in the long run, yields the best energy prices for ratepayers."

Kruger Energy, a division of Montreal-based pulp and paper giant Kruger Inc, won a contract for its C$310 million, 101.2 MW Chatham Wind Project in south-western Ontario, with commissioning expected in 2011. Also on the list of winners is SkyPower Corporation, a Toronto developer that got the nod for its 64.5 MW Byran Wind Project in Prince Edward County at the eastern end of Lake Ontario. Commercial operation of the 43 GE Energy 1.5 MW turbines is expected towards the end of 2010, says the company's Aaron Peters.

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